Apple refuses to increase the cost of music downloads

SAN JOSE, Calif. (AP) -- Songs at Apple Computer Inc.'s iTunes Music Store will remain 99 cents per download after the company extended its distribution deals with major recording labels.
The recording industry and Apple had been at odds over Apple's insistence to keep its flat rate with some labels wanting variable pricing, including higher prices for new releases.
"Apple has all the cards, and when you have all the cards, you can play hardball," said Ted Schadler, analyst at market research firm Forrester Research.
Apple shares jumped 2.9 percent Tuesday after the renewals were confirmed.
The distribution contracts were up for renewal for the first time since iTunes launched in April 2003. Apple said Tuesday it would continue to offer the 99-cent pricing from a library of more than 3 million songs, but declined to comment further.
ITunes helped propel the legitimate music download business, and Apple claims it has about an 80 percent share of the market, which last year climbed to 353 million song downloads in the United States, according to Nielsen SoundScan.
Analysts say recording labels make about 70 cents per download but could pocket significantly more if the prices were raised by a few cents.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.